VZ - Embedded Expectations Analysis - 2021 05 17
Verizon Communications Inc. (VZ:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings with a 17.2x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may be concerned about their DAU improvement, relationship with MVNOs, and the potential of One FiberSpecifically, management may lack confidence in their ability to maintain daily active user (DAU) and overall business growth in the next quarter, execute their fiber and millimeter wave deployment, and obtain clearance from satellite companies for Phase 1 spectrum development in Q3 and Q4. Moreover, they may be concerned about the potential of their Mix & Match Fios offering, the long-term financing of One Fiber, and fiber's impact to the enterprise business. Furthermore, management may be downplaying concerns about their relationship with mobile virtual network operators (MVNOs), and they may lack confidence in their ability to assist customers with their digital transformation. They may also have concerns about the pandemic's impact on SMB growth, the progress of C-Band spectrum auctions, and the effects of heavy traffic on their networks and seasonality on margins. Finally, management may lack confidence in their ability to continue improving their cost structure, achieve a lower net leverage ratio, and grow dividends
Verizon Communications is a holding company. Through its subsidiaries, the company provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. The company has two reportable segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business). The company's Consumer segment provides consumer-focused wireless and wireline communications services and products under the Verizon brand and through wholesale and other arrangements. The company's Business segment provides, among others, wireless and wireline communications services and products, video and data services, corporate networking solutions, security and managed network services.
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